International Economic Review· 2026Q1
The Causal Effect of Parents' Education on Children's Earnings
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- 2026year
Short summary
An exogenous one-year increase in parents' schooling raises children's lifetime earnings by 2% on average.
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Key points
- A model estimates the causal effect of parents' education on children's earnings.
- Identification uses earnings differences in children with equal schooling but different parental schooling.
- Observed intergenerational schooling correlation is mainly due to shared unobserved preferences.
- An exogenous one-year increase in parents' schooling boosts children's lifetime earnings by 2%.
AI-generated from the title and abstract; the full text is not read.
Abstract
ABSTRACT We develop and estimate a model of endogenous schooling and earnings to isolate the causal effect of parents' education on children's outcomes. Identification uses earnings differences among children with equal schooling whose parents have different schooling. Health and Retirement Study data indicate that the observed intergenerational schooling correlation is largely driven by correlated unobserved preferences for schooling. This is partly offset by a slightly negative structural relationship between parents' and children's schooling choices. Nevertheless, an exogenous one‐year increase in parents' schooling raises children's lifetime earnings by 2 % on average.
The authors' abstract, as published at the source. International Economic Review, 2026 · DOI ↗
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Field: Sociology and Political Science
Sociology and Political ScienceSocial Sciences